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Entertainment One recovers after recent slump

Discussion in 'Market News' started by Lily, Dec 9, 2015.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    Company tries to ease concerns about refinancing, while chief executive buys shares

    After two days of hefty losses in the wake of a £285m debt refinancing last week, TV distributor and film business Entertainment One has regained some of the lost ground.

    The company had seen a number of negative comments about the cost of the refinancing from analysts, prompting its shares to lose around a third of their value in just two trading sessions.

    [The refinancing] provides the company with a long term capital structure appropriate for its strategic ambitions. In addition [it] permits greater flexibility by relieving constraints and costs the company historically suffered when undertaking acquisitions and other corporate activity, and allows the company to react swiftly to commercial opportunities.

    In response to the share price fall Entertainment One has this morning reiterated the detail of the refinancing. The flexibility of the covenant-light loan is being paid for by sharply higher interest cost. We leave our target price unchanged but expect the share price to rise after the aggressive falls that have happened as the market digested another earnings per share reduction so soon after the interims and the dilutive rights issue.

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